JONES REVISITED
Page 71
If you've noticed an error in this article please click here to report it so we can fix it.
EARLY next month the National Board for Prices and Incomes 1.1.4 will have completed its first year. Although it has shirked none of the problems referred to it the Board may often have regretted the necessity to take decisions in a hurry. There may also be private misgivings about certain hasty undertakings such as the promise in the interim report on road haulage rates last June to "produce a further report as soon as possible".
On some of the points covered the promise has already become meaningless. The original remit arose from the fact that within the space of 18 months the Road Haulage Association had issued three recommendations for increases in rates amounting in all to about 13 per cent. Wages, fuel tax and vehicle licence duties were the three main items of cost which had gone up, by a total of about 9 per cent according to the Board. The interim report was published before the Board had been able to estimate the effect of several other smaller but still important increases in cost.
HONOURABLE INTENTION
"It is possible", said the report, "that the difference fbetween 9 and 13 per cent) is to be accounted for by changes in those cost elements the movement of which we have not in the time available been able to measure. We intend to investigate this further".
The intention was honourable; the fulfilment would be pointless. The subject is a closed book. Individual hauliers have already negotiated any increases they are likely to get in their rates with or without the assistance of the Board. After all these months they are hardly likely to approach their customers again even if the Board ultimately decides that a somewhat higher increase would have been justified. If the Board takes the opposite point of view it is equally unlikely that the customers would wish to reopen discussions concluded to their satisfaction all those months ago.
The question becomes even more academic when it is remembered that the finding of the Board which most upset hauliers was that "the practice of general rate recommendation by the RHA is not in the interests of the industry or its customers and should be abandoned". The precise elements making up the recommendation seem irrelevant if the recommendation itself is not to be pursued. The Board's final report cannot much longer be delayed once the General Election is over. It is worth having a look at some of the other recommendations in the interim report. After discarding the established practice which had given rise to remarkably few complaints in the past the Board went on to say that the latest recommendation for a 5 per cent rates increase from June 29, 1965, "should, if not withdrawn, not be accepted by the industry's customers".
It was for each haulier to judge, in the light of his own circumstances and the extent to which he could increase his own efficiency, how much he should try to recover from his customers to meet acknowledged increases in costs. The role of the RHA was not to make a blanket recommendation but to give members "comparative information on the relationships between costs, turnover, capital, profit margins and so on in comparable parts of the industry". This would promote "greater accounting responsibility in the industry in general and amongst the small hauliers in particular". Each member "could thus judge his performance by the achievements of others".
FIRST FRUITS
According to the interim report the RHA accepted that it might attempt more in this direction. With the passage of time the first fruits of such an attempt cannot long be delayed. A wage agreement likely to increase earnings by between 6 and 7 per cent has already reached an advanced stage. Alterations of the basis on which tax concessions are made mean in effect that the operator must now pay more for his vehicles. There have been other changes in costs.
The Board estimated that wages constitute about 45 per cent of a haulier's costs. On this reckoning the proposed rise will put up the total costs by about 3 per cent, sufficient in itself for a rates recommendation under the old unregenerate system. The effect of the tax changes is also considerable. Before the introduction of corporation tax last year the purchaser of a vehicle costing £3,000 could have expected tax relief over the life of the vehicle of about £2,250, leaving a net cost of about £750. Under the new system introduced in January last the tax reliefs are reduced to £1,200 and the net cost rises to £1,800, well over twice as much as a year ago.
The financial loss to each operator will vary considerably. Here, therefore, may be a good example of what the Board meant when it deprecated blanket recommendations for increases in rates. On the other hand, presumably the haulier is entitled to some recompense for the effect of tax changes entirely beyond his control.
ft\ BOARD'S FIRST 11-4VICTIM
In passing it may be said that he is equally entitled to grumble at the inconsistency of the Government in selecting him as the Board's first victim but ignoring his claim to any financial incentive. The reference to the Board asks it to investigate the recommended rates increases "in view of the importance of road haulage as an element in the cost of manufacture and distribution of so wide a range of goods for the home and export markets". A similar tribute to road haulage is conspicuous by its absence from the recent White Paper on investment incentives.
The time cannot be long delayed before the RHA takes some action about increases in costs since the publication of the Board's interim report. Presumably the first step will be a meeting of the Association's rates committee to analyse the effect of the increases and determine what procedure should be adopted to replace the discredited general recommendation. As matters stand it would not be impOssible for the meeting to coincide with the Board's final report.
What reasonable alternative can the rates committee adopt? Instead of arriving at a single figure and instead of making specific proposals on rates the committee may calculate what the cost increases have meant for various types of vehicle and various types of operation. Whatever figures it arrives at will be translated inevitably into recommendations on rates. The committee may be tempted to call in the Board to see if that body, which was responsible for the original problem, can do anything better to solve it.